When it comes to buying a stock, most investors think in black and white:

Either you buy the stock now, or you sit on the sidelines and hope it comes down… and then buy it.

But there’s a third choice I often like a lot better:

Get paid income today for simply agreeing to maybe buy a great business later — and only if I can get it at discount to what I think it’s worth.

That’s exactly what I just did with UnitedHealth Group (UNH), a high-quality dividend growth stock that Jason Fieber recently highlighted as his latest Undervalued Dividend Growth Stock of the Week.

Based on his work, UNH is trading well below his estimate of fair value, with a strong dividend growth profile and long-term tailwinds in healthcare.

Instead of rushing in and buying UNH at the current market price, I sold a cash-secured put on UNH in my real-money portfolio – and collected about $980 in cash up front for doing so.

The Basic Setup

Here’s the simple version of what I did with UNH:

Underlying stock UnitedHealth Group (UNH)
Strategy Cash-secured put
Income collected up front About $980 in option premium
Target buy zone if assigned Around the low-$310s per share
Discount to Jason’s fair value estimate Roughly a 30% discount – a big margin of safety
Time frame About one month

With a cash-secured put, I’m agreeing to buy 100 shares of UNH at a preset price if it falls to that level by a certain date. In exchange, someone pays me cash up front.

In this case, that cash was about $980. That’s money I get to keep on day one, no matter what happens next.

If UNH never trades down to my price? I still keep the $980.

Why Not Just Buy UNH?

There are two big reasons I chose a cash-secured put on UNH instead of buying shares outright at the current market price.

1. I get paid immediately.
By selling the put, I collected about $980 in income on day one. That’s real cash that hits my account right away. If UNH stays above my strike price through expiration, the option simply expires worthless — and I walk away with that entire $980 as pure profit on my “willingness to buy.”

2. I’m targeting a much better entry price with a wide margin of safety.
If UNH does drop and I’m assigned, my effective purchase price (after subtracting the premium I collected) will be in the low-$310s per share. Based on Jason’s work, that’s roughly a 30% discount to his fair value estimate for UNH.

So I’m getting paid $980 now to maybe buy a blue-chip dividend growth stock later at a price that builds in a huge margin of safety versus what we think it’s worth.

How the Cash Works in the Background

Because this is a cash-secured put, I’ve set aside enough cash in my account to buy 100 shares of UNH if I’m assigned.

Here’s a lesser-known twist that I really like in today’s higher-rate environment:

In my Fidelity account, that “set-aside” cash doesn’t just sit there earning nothing. I have my core cash position set to a money market fund (SPAXX), which is currently yielding a competitive rate.

That means the same dollars that are securing the UNH put are also quietly earning interest while the trade is open.

So this one position can potentially generate income in two ways:

  • The $980 option premium I collected up front, and
  • Interest on the cash collateral while I wait.

It’s a simple way to make my cash do more than one job.

Two Ways This Can Play Out

Between now and option expiration, one of two simple outcomes will likely happen.

Outcome #1: UNH stays above my strike price.
If UNH finishes above my agreed-upon price at expiration, the put option expires worthless. I keep the entire $980 I collected, my cash is freed up, and I can look for the next opportunity. In that scenario, I’ve essentially earned a solid one-month return on cash without ever owning the stock.

Outcome #2: UNH falls below my strike price.
If UNH trades below my strike and I’m assigned, I’ll buy 100 shares at a price that works out to roughly a 30% discount to Jason’s fair value estimate.

From there, I can hold UNH as a long-term dividend growth position and potentially enhance my income further by:

  • Collecting the dividend over time, and
  • Selling covered calls on the shares for more option income.

Either way, I’m comfortable:

  • If I don’t get the shares, I keep the $980 and the interest the cash earned along the way.
  • If I do get the shares, I’m buying a high-quality business at a deep discount to our fair value estimate, with plenty of margin of safety built in.

The Takeaway

Cash-secured puts aren’t magic, and they’re not risk-free. If UNH falls hard and stays down, I could end up buying shares into a deeper drawdown than I expected.

That’s why I reserve this strategy for high-quality companies I’d be happy to own for years — the kinds of stocks that can recover, grow, and keep raising their dividends over time. UnitedHealth Group fits that bill for me.

The big idea is simple:

Instead of chasing stocks higher, you can sometimes let the market pay you to wait patiently at your price — and keep your cash working for you in the meantime.

Good investing!
Greg Patrick

P.S. If you’d like more ideas like this – including the exact option trades I’m making in my real-money portfolio (with all the details, numbers, and follow-up updates) – I invite you to join us over at Dividends & Income Select.